One of the best parts of my job is watching our client’s families grow. This year alone, we've celebrated with no less than a dozen clients welcoming new babies - many of them first-time parents. And almost every time, amid the joy and excitement, they ask me the same crucial question:

"What should we be doing to prepare financially?"

Here's what most new parents get wrong:

They wing it.

Parenting? Yes - it’s a lot of improvisation and DoorDash at 11pm because your baby finally went to sleep.

But your family's financial foundation?

That's not something you want to piece together from the delivery apps in your phone.

If you're a new parent (or soon-to-be one), this guide will walk you through the five essential financial moves you need to consider. While each could be its own deep dive, consider this your starter roadmap for protecting your growing family.

Estate Planning (aka "The Thing No One Wants to Talk About")

Death and disability.

No one likes thinking about it, but as parents, we have to. A solid estate plan answers three crucial questions:

Who will raise your children (and pets) if you die?
Who gets your stuff (money, investments, house, etc)?
Who makes decisions for you if you're not able to?

Most families put this off, leaving critical decisions (like who watches your kids) unmade.

Spoiler alert - If you don’t create your own, the state has a plan for you - it just might not follow your wishes.

Carly and I created our estate documents earlier this year. It was super important to me that we get something in place asap so that if something were to happen to us, however unlikely that may seem, we know that Cosy would be taken care of.

I certainly don't want to leave it up to the state of California, who doesn't know me, my family, or my wishes.
I also don't want family and friends wondering and fighting.

We made it very clear who we wanted to raise Cosy if Carly and I were to die. And we also wanted to be clear who would watch Groot!

Estate planning certainly isn’t “fun,” but getting it set up now can prevent a lot of problems down the road.

The Dead Simple Insurance Test

Question: Does anyone depend on your income?

If yes → You need insurance.

Two types for new parents:

Life insurance (if you die)
Disability insurance (if you can't work)

Your employer might provide some coverage, but many times it’s not enough for a growing family.

Do the math.

Education Planning

Have you seen the cost of college?

I was curious to see what some potential costs might look like for Cosy and I was stunned!

If she goes to UCSB, it's projected to be $320k.

And if she goes to Westmont (my alma mater) it's nearly $750,000!
Those numbers are wild! Plus there's so much uncertainty:

will your kid want to go to college, and if so, which college?
will they get a scholarship?
will there be financial aid?
what does college look like in 18 years?

It's such a moving target - it could be $0 / year, it could be close to $200k / year.

But starting to plan and save now gives you the power of time and compound growth

Emergency Fund

This should surprise literally no one...kids are expensive!

food
childcare
health insurance
medical emergencies
and who knows what else

Your expenses are higher, so your emergency fund needs to be higher...don’t let unexpected expenses catch you off guard, derailing your savings.

Cash Flow

You need to revisit how you are saving, spending, and investing. Some expenses will go up, others will go down.

Will both spouses work, and if so, what are you doing for childcare?
Will one spouse work less, and how will you account for the lower income?
Do you need to shift where you are saving and investing?
- Maybe cutting back on your 401k temporarily to get started on a 529?
- Or now you start maxing out a dependent care FSA?
- How does your ESPP and RSUs fit into the equation?

These aren’t recommendations - everyone's situation is different, and there is no "one size fits all" approach.

But don’t be surprised if things need to change

This is an example of an exercise we go through with clients each year, so we are intentionally planning for their surplus.

Taking Action

Becoming a parent transforms your life in wonderful ways - and it also transforms your financial needs. While juggling diapers, sleepless nights, and all the joy of a new baby, it's easy to put off these decisions.

Most new parents are too busy surviving to plan.

I get it.

But here's what talking with dozens of young families families has taught me that a little bit of time and a little bit of money now will save you a lot of time and a lot of money down the road.

Taking action now creates a strong foundation for your family’s future.

Want help building your family's financial foundation?

We specialize in helping young families build confident financial futures. Schedule a call to see how we can help you protect what matters most.

Till next time,

—Joe

P.S. Forward this to a friend who's expecting. They'll thank you later!